Owning a car opens a world of opportunity. A better job that requires a commute can now be attained. Your nightlife options have now been blown wide open. And if you need to get groceries, attend an appointment, or run other errands, it doesn’t take nearly as long as public transportation. But your car payment might be a stretch on your budget. If you don’t know how you’re going to keep paying for it, here are a few tips on how to lower your car payment.
How to Lower Your Car Payment
Apply for Refinancing
Often, buying a car won’t be at the best terms possible. Just to buy a car, you may agree to higher payments than you feel comfortable with. You might have a shorter loan term or a high interest rate. While it may have been necessary at the time, you might qualify for better terms now. Call your financial institution and ask about the options to refinance your loan. If it’s possible to do so with the same lender, it can make things easy. Otherwise, you may have to apply for a car loan with another lender. Credit unions often offer extremely competitive rates with the only stipulation being that you need to become a member.
Skip a Payment
Check the fine print on your loan paperwork. Most car loans have a built-in clause that allows you to skip a payment. But be aware – you’ll need to arrange it ahead of time. If you don’t, it will be reported as a missed payment on your credit bureau. When you skip a payment, it can alleviate the temporary financial stress of a high car payment. The payment gets tacked onto the end of your loan, so it’s not like it’s been paid for you. As well, you are typically restricted to, at most, one skipped payment annually.
Buy a Different Car
Does it sound counter-intuitive? It’s true, though. Buying a car can be how to lower your car payment. While a new car loan might have a higher overall cost, the financing agreement can often be over a longer term and at a lower interest rate. To make buying a different car work for you, you’ll need to choose a vehicle that’s nearly new. Those are the ones that can be financed over the longest term. If you need to find out how to lower your car payment, CarUp can help. We can get you into a newer vehicle at a lower payment so your monthly burden is a little less.